Global Private Equity Group

Overhauling digital capabilities to improve EBITDA leads to $100M annual savings

Overhauling digital capabilities to improve EBITDA leads to $100M annual savings

Our Impact  

A private equity group wanted to increase the potential value and ROI of its portfolio investments. To accomplish this, they needed to empower portfolio companies and private equity sponsors with data. Improved data capabilities would mean more autonomy in decision-making and increased efficiency in operations—ultimately leading to lower annual costs.  

West Monroe helped our client improve control over individual portfolio company decisions, saving millions in operating expenses each year. During this digital overhaul, we helped them initiate leveraged sourcing program development, drive portfolio company adoption, and create roadmaps for rapid value creation.   

$100M

saved in operating expenses each year 

100%

opt-in model, allowing more freedom in portfolio company decision-making

10-30%

saved on category costs for portfolio companies

The Full Story 

The Challenge 

There’s no doubt that shrewd investments are made with solid data. To improve the EBITDA of their portfolio company investments, our client needed digital tools to drive process and cost optimization. By enhancing their digital capabilities and providing digital playbooks, our client gained more visibility into spending and the tools to develop their transformation roadmap.  

The antithesis to data is disconnected systems. Our client’s portfolio of investments used disparate approaches to back-office functions, procurement, and the supply chain. As a result, individual investments and the private equity firm itself had limited visibility to portfolio investments and costs. We helped them overcome this challenge by leveraging expertise in procurement, mergers and acquisitions, and private equity. We also developed a program management office (PMO) tailored to our client’s culture and client approach. 

An Undeniably Different Approach  

One reason the private equity group chose us for this project? Our strategic sourcing and PMO capabilities, which were proven over multiple years of working together prior to this initiative. They were confident in our multidisciplinary approach and the potential increase in efficiency. Our multi-disciplinary team was able to work together to significantly reduce operating expenses by: 

  • Leveraging our sourcing program development and operations experience to jump-start the client’s programs; this work included driving adoption, fostering cross-collaboration, and convincing suppliers of its value  
  • Developing governance standards for supplier scoring, contract negotiations, and sourcing categories 
  • Aiding in selecting indirect and technology categories in which the client would implement vendor selection guidelines 
  • Driving adoption for dozens of portfolio companies—choosing KPIs and designing the reporting to track portfolio sourcing performance and support value-creation discussions 
  • Creating how-to playbooks for portfolio companies to use for rapid value creation 

Our experience with private equity firms has identified key levers that are critical to project success. We focused on defining how the client would approach participation, spend category selection, category sourcing, and ongoing involvement. Getting this right helped us set the foundation to unify their approach across portfolio investments and gain a new level of visibility into investment EBITDA. 

Real Results  

Now our client has powerful digital and data capabilities. They can demonstrate quantifiable financial and operational process value for prospective investments and investors. Additionally, unifying the approaches to business functions has led to steep cost savings of between 10-30% across a multitude of spend categories, representing $100 million each year.  

For the private equity sponsor, the project has meant higher EBITDA and improved ROIs, differentiated value creation, and the ability to recoup leveraged purchasing program development costs. Portfolio companies have also benefited from leveraged purchasing power, redeployment of sourcing assets, and broader category expertise and market knowledge. 

Going digital has optimized processes and the cost of doing business.  

Project Timeline

4-6
Weeks
Developing spend baselines, identifying common supplier and category opportunities and outlining priorities for pursuit (low hanging fruit, longer term initiatives, etc.)
6-8
Weeks
Pursuing preliminary value creation initiatives, securing quick wins, establishing PMO structure, socializing PE firm approach with portfolio companies
8-12
Weeks
Driving program adoption, collaborating with individual portfolio companies to show value, manage adoption and migration to PE firm preferred supplier offerings, initiation of cross-portfolio best practice identification and sharing
8-12
Weeks
Developing and managing preferred supplier governance programs, spend data refreshes and updates and developing second and third wave cost transformation priorities

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